Scaling Up Excellence

How’s your process excellence initiative going? Frustration and confusion everywhere, pummelled by unpredictable and unpleasant events, the stench of failure in the air?  So far so good, then. That’s according to Robert Sutton and Huggy Rao, Stanford professors whose research convinces them that ‘organizations that scale well are filled with people who talk and act as if they are in the middle of a manageable mess’.

Scaling is fraught with risks and uncertainties. Even the best leaders and teams recognise that muddling through can be inevitable, sometimes for months, while searching for the best way forward. Scaling stars have grit. ‘It’s not simply a marathon. It’s like running a long race where you don’t know the right path, often what seems like the right path turns out to be the wrong one, and you don’t know how long the race will last, where or how it will end, or where the finish line is located’.

It’s refreshingly candid advice, and Scaling Up Excellence is full of it.  On a seven year journey that started with a Stanford management education program on ‘Customer-Focused Innovation’, Sutton and Rao set out to explore The Problem of More:

“Executives could always point to pockets in their organizations where people were doing a great job of uncovering and meeting customer needs. There was always some excellence – there just wasn’t enough of it. What drove them crazy, kept them up at night, and devoured their weekdays was the difficulty of spreading that excellence to more people and more places. They also emphasized that the Problem of More (which they often called “scaling” or “scaling up”) wasn’t limited to building customer-focused organizations; it was a barrier to spreading excellence of every stripe.”

Scaling Up Excellence is a thoughtful, easy-to-read and intensely practical book about successful business transformation and innovation: how to start it, lead it, nurture it and sustain it. Continue reading

A Simplification Bandwagon Begins To Roll

iStock_000000213421MediumIs business simplification at last moving up the strategic agenda?

In recent discussions with three global organizations,  it’s the senior people who are arguing forcefully for simplicity. Admittedly,  all three are in Life Sciences but my hunch is that it’s a wider quest.

As one CxO put it:

“The world in which [this organization] operates is already complex. It is set to get far more complicated in the next three to five years as we work more collaboratively with clients, partners and service providers. There are going to be far more opportunities to do the wrong thing at the wrong time with the wrong person. Our risks are increasing rapidly. “

She went on to identify one of the root causes:

“At the moment, we deal with complexity by hiding it.  We bury it deep down in inpenetrable SOPs.  We need to expose that complexity. It’s the first step in simplifying our business – and engaging our people.”

Seems to me that she’s right on both counts.  Complexity has to be exposed before it can be reduced (and the direction of travel there is, of course, from a document-defined world to a process-based mindset that leverages the power of visualization).

It’s not just that people can’t contribute to a better way of doing things (or even do their current jobs well) if they don’t understand the big picture – though that is clearly true.

The strategic headlines here are about risk. People working in complex, fast-moving and perilous conditions – firefighters and surgeons, for instance – are drilled in situational awareness.  They are taught never to lose sight of the big picture.

Arguably, global businesses are becoming far more complex, fast-moving and perilous than surgery or firefighting. They require the orchestration of large numbers of people, spread across all regions of the world, and collaborating across organizational boundaries and functional silos. Situational awareness matters more than ever, which is why business simplification looks set to become the zeitgeist.

Related Posts

25 Mar 2013   When Process Precision Saves Children’s Lives

19 Mar 2013   The Risks In Social Without Governance

© Text Michael Gammage 2013

Outsourcing’s Secret Sauce

Deloitte - Outsourcing Today and Tomorrow - Nov 2012Deloitte’s report Outsourcing, Today and Tomorrow, just published, attempts to define the secret sauce for outsourcing. The authors are engagingly frank:

“We wish we could wrap up this paper with a pithy summary of the secrets of effective outsourcing, boiled down into a neat list of easy-to-digest bullet points. Unfortunately, if such secrets exist, no one has yet discovered them.”

But they go on to suggest ‘one possible candidate’ for outsourcing’s secret sauce:

“The recognition that outsourcing, like other complex business practices, is a discrete business discipline requiring specialized skills that cannot easily be developed on the fly.”

Which may be true – let’s agree it’s one of the essential spices – but it overlooks an essential ingredient, arguably the foundation for outsourcing’s secret sauce: a platform for effective collaboration, which surely lies at the heart of successful outsourcing.

This platform provides a common language: end-to-end process, expressed in the language of the business, not IT-speak. It is comprehensive, not just IT-oriented. It provides integrated perspectives, not just a repository of process fragments. It is wrapped within a robust governance framework to enable process stakeholders – across the enterprise and including especially IT – to effectively manage change. And, crucially, it enables deployment to process users in a way that is personalised, intuitive and engaging.

The Deloitte report – which polled 100+ sourcing professionals earlier this year – provides ample evidence that this need for a common language, a framework for more effective collaboration, is real and growing:

Outsourcing is big – a $480bn industry this year – and set to expand. So too is offshoring.  But operational roles and responsibilities are often amazingly unclear. [There is far too much focus simply on contractual negotiations]

Cloud will vastly increase its complexity. [as will Social, Mobile and Big Data]

Churn is increasing: half of clients have terminated contracts for convenience, sometimes to insource, most often to re-outsource. [Managing complex dynamic multisourced service delivery environments is becoming the norm]

Innovation and sustainable success in continuous improvement can’t work without it. [Innovation and continuous improvement is the area where organizations report that they are least effective in working with service providers].

Related Posts

21 Aug 2012    How To Simplify Global Shared Services

20 Jun 2012    Process: The Emerging Global Business Language

© Text Michael Gammage 2012

How To Simplify Global Shared Services

Most multinationals are almost ridiculously complex. It’s a barrier to innovation, compliance and sustainable improvement – and increasingly a C-Level issue. Simplification has been one of three strategic priorities at GSK, for instance, since 2008.

So Deloitte’s report on reducing complexity in global shared services organizations is well-timed. Unfortunately though it misses the point.

Deloitte sets out survey results which illustrate the prize.  Tackling complexity effectively, says Deloitte, can reduce the costs of delivering Finance, HR and IT by up to 20%, even in already ‘rationalised’ global shared services organizations.  And yet only 30% of CFOs believe that their efforts in tackling complexity are successful.

The low-hanging fruit of labour arbitrage and automation were harvested long ago. ‘Getting a grip on complexity is’, in Deloitte’s words, ‘the next frontier in reducing costs [of Finance, HR, IT and other non-core support activities]’.

Which is great. But, alas, Deloitte’s report on how to get a grip on complexity is – frankly – very complicated.   It could do with a complexity reduction program of the sort that it proposes. It presents interesting ideas but doesn’t join the dots.  Its definitions of an operating model and a business model don’t quite work. Its attempt to define four different types of complexity – portfolio, organizational, process and information infrastructure – don’t hang together well. It’s light on governance and controls. It recognises the significance of master data management but doesn’t link it with process management. To its credit, the report clearly advises a focus on end-to-end process. But it dismisses ‘process flow diagrams’ in favour of an exotic visual value stream approach, the benefits of which would be incidental at best.

More fundamentally, it overlooks what must be the 72pt headline to the complexity-slayer story: the power of process visualisation.

End-to-end perspectives, expressed in the language of the business, with design principles that make it intuitive and easy on the eye. All managed within a methodology that blends compliance rigour with support for people doing real work, and ensures IT alignment. This is what drives engagement in sustainable improvement and therefore, ultimately, in business simplification.

And it’s not just effective in untangling process spaghetti, or bringing coherence to process fragments.  I’ve seen it equally effective in enabling organisations to escape the deadweight of enormous SOP document libraries and migrate to a far more agile world where end-to-end process provides the overarching narrative, supported where necessary by far fewer, and far slimmer, SOP documents.

A picture being worth a thousand words etc, we shouldn’t be surprised that once people can see what’s going on, they are far better equipped to identify unnecessary complexity and collaborate to safely ‘make things as simple as possible but not simpler’ (to paraphrase Einstein, who never wrote on shared services, as far as I know, but knew a thing or two about complexity..).

Related Posts

28 Nov 2011    Cracking Complexity in Novartis

30 Sep 2011    Optimize 15,000 Business Controls? No Problem.

26 Apr 2011    Process As Science And Art

Lean Pharma: Tackling Compliance Obesity

Not to put too fine a point on it, Quality and Compliance are often completely out of control in PharmaLand. No-one doubts the need for uncompromising quality and compliance. But the way that this is delivered in Pharma today is not just over-engineered and over-expensive, it’s become a source of risk in its own right.

Things can get to a point in obesity where surgery is the only way out. Everything I see suggests that we’ve reached the point where only a radical new approach can slice through and remove the multiple, overlapping layers of complexity to expose and manage the true compliance essentials underneath.

In a recent workshop with a Pharma organization, we were attempting to condense several dozen SOPs into a standard global process. The SOPs were often vague, long-winded, contradictory and only tenuously linked to the Quality and Compliance manual. So while the formal SOPs are consulted, in practice, they are usually ’supplemented’ by informally ’asking an SME’.

That’s of course when the SOPs are readily available. Recently a global process owner offered to print out for me the two ‘foundation’ SOPs for his process. It took him 15 minutes to find one of the SOPs – and that was in the dedicated Sharepoint site for this particular process.

These organizations are not unusual: as far as I can see, this is close to the Pharma norm. The people involved are bright, conscientious and endeavour to act with integrity at all times. But they are overwhelmed with unclear and sometimes conflicting information. In CMMI terms, these are organizations operating near to the lowest point on the process maturity curve: Quality and Compliance is often being delivered through a culture of heroes.

Most Pharma organizations are pursuing programs to simplify, to standardise and to eliminate non-value-add (NVA) activities. But often quality and compliance functions are barely touched.

It’s a nettle that has to be grasped. Outsourcing and re-shaped business models can only go so far to deliver the required levels of performance improvement. Quality and compliance isn’t going away. In fact, the reverse. The compliance burden is set to grow rapidly as Pharma expands into emerging markets and branded generics, and develops global operations in an increasingly multipolar regulatory world. With the costs of regulatory non-compliance spiralling, it’s not difficult to imagine that Quality and Compliance may soon be the largest single NVA in many organizations.

The liposuction equivalent for Compliance obesity is, of course, the adoption of a process management platform. In a client workshop I supported last week, that team succeeded in condensing numerous SOPs into a single standard global definition of Validation. We spent two days creating the two top levels of the process model. The power of process visualization, the rigour of a process hierarchy, and the constant pressure to describe things simply, in the language of the user, led to real agreement on a standard global process.

There’s plenty of detail to be added. And the activities in this process, and its regional and site variants, will need to be cross-referenced to the library of quality and compliance requirements. But eventually, and after completing the review and authorisation cycle, it will be published – and delivered to process users as easy-to-follow role-based storyboards.

It’s an approach that’s absolutely rigorous. It’s also multi-dimensional. It’s designed to manage complexity. It supports rich what-if analytics. But, critically, it’s also focussed on simplicity, on user adoption and enabling real work. Which is why it’s the key to Lean Quality and Compliance – and continuous improvement.

Managing The Downside Of Global Processes

Why is is that even leading multinationals seem less healthy than successful companies that stick closer to home?

In an article just published Understanding Your Globalization Penalty, a McKinsey team set out to provide some answers.

The findings from McKinsey’s organizational health survey data (from 600k people in 500 corporations) was ‘troubling’. The weaknesses shown by even multinational leaders ‘touch on all three major areas of organizational health—alignment, execution, and renewal’. The McKinsey team was clearly surprised:

“The global leaders we studied represented the cream of the crop—they not only enjoyed strong financial performance but also had significant global scale and scope, which is why we included them in the sample. If organizations like these can’t stay healthy as they grow globally, can any company?”

To make sense of the data, they went on to interview executives at 50 global corporations. The answers highlighted the familiar challenge: how to balance the benefits of local ownership and focus against the potential benefits of global scale and coordination.

The McKinsey team noted that many multinationals just don’t have the collaborative framework in place to make the right choices, and be able to continuously re-optimize as circumstances change:

“Complicating matters further, our interviews suggested that, for most companies, about 30 to 40 percent of existing internal networks and linkages are ineffective for managing global–local trade-offs and instead just add costs and complexity.”

This is very much at the centre of our radar at Nimbus. Our clients are looking for a collaborative framework that enables them to manage the trade-off between standard global processes and necessary local variants.

It’s easy to love global processes. To some extent, they can be imposed – in supplier payment terms, for instance. But, most often, some local variants will be essential for legal reasons, or just plain efficient in overall business terms. And it’s always fluid: what is justifiable as a local variant today may not be next year; and sound new reasons may emerge for new variants.

So every enterprise needs a collaborative framework that, on the one hand, enables a relentless convergence towards global processes, and higher levels of automation, but, on the other hand, recognises that standardization is ultimately unattainable, and is able to manage intelligently the local variants and the continual re-optimization of the balance between global and local.

It’s a capability that looks set to become ever more crucial. The McKinsey team note that many firms ‘are wrestling with the corporate center’s role in their increasingly globalized institutions’. They suggest that ‘it may be time for some companies to reimagine what the corporate center does… And since even leading multinationals appear to suffer this globalization penalty, the importance of addressing it will only grow larger in the years ahead’.